The occasional criticism of the city's electric utility, the EPB, for building a gigabit-fast smart-grid and competing in the cable television/phone/Internet market is excessively shallow and wholly misplaced. The city-owned public utility's customers are receiving vastly improved services and stunningly reduced powers outages, all at appreciably lower rates due to the EPB's widely praised smart grid - and more advanced services are on the way.
The EPB's Fiber Optic business, a natural add-on for the utility's nation-leading broad-band capacity, is also quickly paying for itself while generating extra revenue that keeps power rates even lower.
The financial returns reported by the EPB for its nationally recognized power and cable operations may not be widely understood by many customers, but that's not surprising. Most of us take reliable electric power as a given, at least until a severe storm knocks out our service.
Moreover, the EPB's president and CEO, Harold DePriest, a veteran engineer, doesn't go around bragging about the EPB's rising record as one of the nation's most advanced electric utilities. The utility's employees just keep it humming. That explains, however, why the Chattanooga Area Chamber of Commerce has just named DePriest as recipient of its "manager of the year" award. It's a well earned honor. There is plenty to brag about.
In addition to building the only gigabit-powered, truly smart grid in the nation, the utility has installed approximately 1,200 "IntelliRupter" smart switches on its 12-kilovolt power distribution network across the EPB's 600-square-mile service area. It has put more than 200 smart switches on its powerful 46 kilovolt trunk lines. This advanced circuitry enables EPB to re-rout power almost instantaneously when power lines are knocked down or service is interrupted.
EPB has also installed 170,000 smart meters at business and residential delivery points across its multi-county territory. Now, power outages are so rapidly contained by this rerouting and self-healing system that many customers never know there's been an outage near them. And when outages do occur, they don't last nearly as long because the smart-grid technology points power-line crews to the source of outages.
When the EPB initiated the smart grid project, its goal was to reduce outage duration by 40 percent, which would save its customers roughly $40 million a year in lost business and down-time. By July last year, it had reached a 55 percent improvement in outage reductions, with 42,000 fewer customers affected by outages. By January 14 this year, it reported a 100 percent improvement in outage reduction, blocking affects for another 19,300 customers.
Smart-grid meters on homes, moreover, self-report in milli-seconds when power dims, enabling the system to rapidly sustain full-voltage quality electricity. When TVA, EPB's wholesale power producer, meets its goal of establishing time-of-use rates that enable consumers to use cheaper off-peak power, the benefits of the "smart-grid" will be even more tangible as customers begin managing their power use remotely to control appliances and save money.
The smart grid is already saving EPB's operating costs and power outage losses more than $12 million annually, in addition to saving its customers around $50 million due to outages and lost work time for businesses.
Such gains relative to the EPB's return on investment in the $280 million investment in the smart grid (including a federal energy efficient grant of $111 million) prove the project is a smart investment. At a community level, the investment would be amortized in less than five years. That's a remarkable payoff in energy efficiency, which is why the Department of Energy contributed.
None of these improvements could occur under the less-advanced systems that employ microwave or cellular technology and call themselves "smart grid." They are too prone to weather-related faults and gross time delays in reporting outages. They also can't support the incredibly advanced software that makes smart gird circuitry self-healing.
EPB's addition of cable television, Internet and phone service just adds to the efficiency formula and lower electric rates. EPB, of course, isn't allowed under state law to subsidize the cost of installing and running the its fiber optic business. That must be financed by the cable business itself. But EPB is allowed to reap the net profits that it makes on the EPB Fiber Optics brand.
Those profits, in turn, have saved the EBP electric power system $57 million since the startup, which equates to avoiding a 4 percent electric rate hike. As the cable system adds more customers to rapidly expanding base, those profits will grow, further diminishing periodic electric rate increases passed down by TVA. The rate of return to EPB on the cable business asset will pay off the $97 million investment in cable in less than 10 years.